The New Era of Thrift: Changing Spending Habits in the Face of Recession

EXECUTIVE SUMMARY

Key Drivers

Summary 1 Factors Affecting Thrifty Behaviour

Consumer Market Trends

Retailing Trends

Outlook
Summary 2 Opportunities and Challenges in 2009 and Beyond

INTRODUCTION

The End of Conspicuous Consumption

Different Perspectives on Thrift

A return to post-war austerity

ECONOMIC DRIVERS

State of the Economy

Table 1 Real GDP Growth in Selected Markets 2003-2008

The Impact of Unemployment

Table 2 Unemployment Rates in Selected Markets 2003-2008

Spending Versus Saving

Savings ratio low in developed markets
Asian consumers better positioned
Women Spend, Men Save
Table 3 Savings Ratios in Selected Markets 2003-2008

Rising Food Prices

Food price hikes cause concern in West
Rice and grain prices reached record highs in 2008
Prices stabilise in 2009
Table 4 Index of Food and Non-Alcoholic Beverages Prices in Selected Markets 2003-2008

ENVIRONMENTAL DRIVERS

Green Consumerism

Renewed focus on reducing waste
Decline in willingness to pay extra for green products
Chart 1 Consumers Agreeing that “The Extra Cost of Environmentally Friendly Products Is Not Worth It To Me” 2008-2009

Greener Transport

Decline in new car sales
Table 5 Number of New Passenger Car Registrations in Selected Markets 2003-2008
Eco-friendly alternatives
Table 6 Alternative Transport For Consumers Whose Transportation Habits Changed Over 2008-2009

Locally-Produced Food

Supporting local farmers
Consumption of local food highest in Russia, but soaring in US
Chart 2 Consumption of Locally Grown Food in Selected Markets 2009

Self-grown Food

Vegetable plots in demand
India leads the way
Chart 3 Consumption of Self-Grown Food in Selected Markets 2009

Swapping, Mending, Buying Second-hand

Re-using old clothes
Chart 4 Consumers Agreeing that “I Try To Buy Things “Used” Or Pre-Owned, Rather Than Brand New” 2008-2009, Selected Markets
Recycling in the name of fashion
Mend and make do
Chart 5 Consumers Agreeing That “I Prefer to Repair Something When It Is Broken Rather Than Replace It” 2008-2009 Selected Markets

CONSUMER DRIVERS

Frugalistas

Women taking control
Backlash against fast fashion

Cocooning

The cheaper option
Home as an entertainment hub
Chart 6 Global Sales of Selected Consumer Electronics 2003/2008

Eating and Drinking Habits

Back to Basics: A revival in World War II skills
Table 7 Global Consumer Foodservice Versus Retail Packaged Food Sales 2003-2008
Changing alcohol consumption patterns
Table 8 Global Alcoholic Drinks: Off-Trade Versus On-Trade Sales 2003/2008

Bargain Hunting

Culture of value well-entrenched
Rise of Internet shopping

The Lipstick Effect

Women reluctant to give up small luxuries
As long as the price is right

Voucheristas

From snipping to downloading
US consumers swayed by coupons
Internet coupons take off
Mobile coupons offer convenience and ecological benefits

Do it Yourself

Table 9 Sales Through Home and Garden Specialist Retailers in Selected Markets 2003/2008

The Impact of the Internet

Growing number of “netizens”
Table 10 Number of Internet Users in Selected Markets 2003/2008

Price Comparison and Money-saving Websites

Price comparison sites
Summary 3 International Price Comparison Websites 2008
Travel search engines
Money-saving websites

IMPACT ON CONSUMER MARKETS

Packaged Food

Benefiting from the stay-at-home trend
Back to basics
Chart 7 Global Sales of Selected Basic Foods 2003/2008
Indulgence Foods
Chart 8 Global Sales of Selected Indulgence Foods 2003/2008
DIY Lunches
Chart 9 Global Sales of Selected Packed Lunch Items 2003/2008

Cosmetics and Toiletries

From premium to masstige
The “lipstick effect” in action
Chart 10 Global Sales of “Feel Good” Cosmetics and Toiletries 2003/2008

Consumer Foodservice

Restaurants offer promotions to lure back diners
Fast food operators focus on value offerings
Chart 11 Global Sales of Consumer Foodservice 2003/2008

Tourism

Slowdown in Arrivals
Table 11 Global Tourism Arrivals 2003-2008
International versus domestic tourism
Table 12 Global Tourism Departures – International Versus Domestic 2003-2008
Currency fluctuations
Table 13 Selected Exchange Rates Against The US$ 2003-2008
Low-cost versus scheduled airlines
Table 14 LCC Revenues as a % total LCC/Scheduled Airlines Revenues in Selected Markets 2003-2008
Downgrading
Camping regains popularity
Table 15 Revenues from Campsites in Selected Markets 2003/2008

IMPACT ON RETAILING

Changing Shopping Habits

The Rise of Hard Discounters

Table 16 Global Sales through Hard Discounters 2003-2008

Supermarkets’ Reponses to Recession

Promotional tactics to attract frugalistas
Increasing emphasis on private labels
Table 17 Leading Markets for Private Label by Value 2002/2007

The Dollar Store Boom

Fashion Retailing Trends

Fast fashion appeals to bargain hunters
Discount designer wear

The Growth of Internet Retailing

Table 18 Internet Shopping as a % Total Retail Sales by Selected Market 2003/2008

COUNTRY TRENDS

Australia

Economic background
Table 19 Australia: Economic Indicators 2008-2010
Recession behaviour
Table 20 Australia: Per Capita Consumer Expenditure 2008-2010

China

Economic background
Table 21 China: Economic Indicators 2008-2010
Recession behaviour
Table 22 China: Per Capita Consumer Expenditure 2008-2010

France

Economic background
Table 23 France: Economic Indicators 2008-2010
Recession behaviour
Table 24 France: Per Capita Consumer Expenditure 2008-2010

Germany

Economic background
Table 25 Germany: Economic Indicators 2008-2010
Recession behaviour
Table 26 Germany: Per Capita Consumer Expenditure 2008-2010

Italy

Economic background
Table 27 Italy: Economic Indicators 2008-2010
Recession behaviour
Table 28 Italy: Per Capita Consumer Expenditure 2008-2010

Japan

Economic background
Table 29 Japan: Economic Indicators 2008-2010
Recession behaviour
Table 30 Japan: Per Capita Consumer Expenditure 2008-2010

UK

Economic background
Table 31 UK: Economic Indicators 2008-2010
Recession behaviour
Table 32 UK: Per Capita Consumer Expenditure 2008-2010

US

Economic background
Table 33 US: Economic Indicators 2008-2010
Recession behaviour
Table 34 US: Per Capita Consumer Expenditure 2008-2010

FUTURE OUTLOOK

Economic recovery on the horizon?
Table 35 Forecast GDP Growth in Selected Markets 2008-2013
Unemployment to peak in 2010
Table 36 Forecast Unemployment Rates by Country 2008-2013
Consumer confidence to remain weak
Spending will slow in short term
Table 37 Savings Ratios in Selected Markets 2008-2013
Frugal habits to remain entrenched
The need to reduce waste
The quest for value
Private label growth
Cocooning is here to stay
Eating out versus home cooking
Table 38 Forecast Global Sales of Packaged Food Versus Consumer Foodservice 2008-2013
Travel industry will be slow to pick up
Table 39 Forecast Global Tourism Departures – International Versus Domestic 2008-2013
Implications for marketers

---